He can't do this, though. Aren't the Bengals the only team he can play for until the length of his contract expires?

Yes, and if he retires his contract goes on hold and resumes as soon as he unretires. As long as he comes back before the reporting date set for that purpose, it counts as a year towards his contract obligation. If he missed the date set, he plays out this year but gets no credit for it or just sits the whole year.

The post above was suggesting that he'd be put back on the team but then they'd have a player that has no value because he hasn't practiced, is only a major distraction, and forces another player (probably not a QB until Palmer is back up to speed on gameplans) to be cut. It's a huge headache for a team once they've already planned for a player to not be there and, as long as he files the paperwork, it's not considered a holdout.